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You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Alvarez v Moor & Anor [2019] EWHC 1774 (QB) (15 July 2019) URL: https://www.bailii.org/ew/cases/EWHC/QB/2019/1774.html Cite as: [2019] EWHC 1774 (QB) |
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
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JUAN CARLOS ALVAREZ |
Claimant |
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- and - |
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(1) DR JACOB MOOR (2) ERICH KNOEBL (3) SHATTON INDUSTRIES LIMITED |
Defendants |
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The First Defendant appeared in person and for the Third Defendant
The Second Defendant did not appear and was not represented
Hearing dates: 11th-12th and 14th-17th June 2019
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Crown Copyright ©
The Honourable Mr Justice Kerr:
Introduction
Facts
"In our function as project undertaker we have received from the American authorities a platform to finance our multi-billion sized projects ourselves …. We do not offer our services on the market, with this one exception …".
"setting out the project schedule, the profit return and its provisions. In the event that no agreement on terms and schedule of the return profit are reached then the Investor may request Shatton in writing to swift back his own funds … and Shatton shall forthwith procure the return of the funds …".
"on a monthly basis during the agreed life span of the agreement".
It is anticipated (based on historical records) that the yield indications is approximately US $ 0.30m-1.25m per annum based on a minimum net credit of US$ 1.0m. Final amount will be adjusted in Annex III. …"
[Diagram or picture not reproduced in HTML version - see original .rtf file to view diagram or picture]
Main Factual Conclusions
(1) Shatton was not a "shell company" in 2007, when it first approached Mr Alvarez and Mr Koenigbauer. Its business was real enough; the bank references and other documents provided by Dr Moor were probably genuine and reflected real business Shatton had done in the past. The projects described in the powerpoint presentation were not mythical; their grandeur was probably exaggerated but they existed.
(2) Dr Moor is not an honest man, nor a witness of truth. He may have convinced himself, subjectively, that he is a man of truth, integrity and honesty, with (in his own words) a "high code of honour"; but, objectively, that is not compatible with his words and actions, which were such as ordinary decent people would regard as false, deceitful and dishonest.
(3) Mr Knoebl is not honest or truthful. He was the author of most of the statements about the "Fed", which were untrue. The warmth and friendship expressed in his emails may have reflected genuine sentiment; but that did not prevent him from consciously exploiting the friendship to neutralise any resistance or inhibition Mr Alvarez might have about parting with his money.
(4) If I need to make a positive finding of dishonesty on the part of Dr Moor and Mr Knoebl, I do so. Both had, at least, a reckless disregard for the truth and sometimes full knowledge of the falsity of their words and deeds. It is not required that they themselves appreciated that what they said and did was dishonest by the objective standards of ordinary decent people (Ivey v. Genting Casinos (UK) Ltd [2018] AC 391 per Lord Hughes JSC at [74]).
(5) I think it likely that there are numerous undisclosed written communications between Dr Moor and Mr Knoebl. I note that one of the few emails that was disclosed included Mr Knoebl describing Mr Alvarez as "superficial" and included recommendations on how best to pacify him and induce him not to cause difficulties. That was part of the concerted plan to manipulate Mr Alvarez.
(6) Mr Knoebl was held out by Ms Weiss and Mr Knoebl as being the Vice President of Shatton; and both Dr Moor and Mr Knoebl held Mr Knoebl out as having full authority to provide information on Shatton's behalf and to issue documents in Shatton's name that could bind Shatton in contract. The use of a private email account does not alter that conclusion; nor does Mr Knoebl's lame explanation that the title of Vice President was in some sense informal, unofficial or historic.
(7) It is not plausible that Mr Knoebl was an unpaid business associate of Dr Moor. While Dr Moor denied any social relationship with him, Mr Knoebl described himself as a longstanding friend and probably the closest person to Dr Moor on the planet. He described Dr Moor using language expressing reverential admiration for Dr Moor's achievements; but I do not begin to accept that his devotion extended to providing his services for free. His expressions of devotion and admiration were part of the services he provided to Dr Moor and Shatton.
(8) From January or February 2007 onwards, Mr Alvarez and Mr Koenigbauer were deliberately led to believe the false statements made to the effect that Shatton had access to "Fed" controlled investment opportunities not available on the open market, with unusually high returns expected, entered into under the cloak or (in Mr Alvarez's word) "costume" of humanitarian infrastructure projects to be undertaken by Shatton.
(9) There is no objective evidence that Dr Moor, Mr Knoebl or Shatton had any relationship with the "Fed" or any US investment bank that could provide access to programmes of investment organised by the Fed or authorised by the Fed or any of its agents for chosen investors. The use of this false story was intended to, and did, succeed in persuading Mr Alvarez and Mr Koenigbauer to transfer money to Shatton.
(10) Dr Moor manipulated the documents provided to LLB when setting up Shatton's sub-accounts within the accounts of Mr Alvarez and Mr Koenigbauer so as lead them to believe that they retained control over the money in Shatton's sub-accounts when in fact, and unbeknown to them, Shatton was able to remove their money from the sub-accounts without their signature or consent, despite the powers of attorney and certificates of beneficial ownership.
(11) Dr Moor and Shatton were far more in need of money than he led Mr Alvarez to believe. Mr Knoebl and Dr Moor deliberately gave the impression that Shatton's turnover ran to hundreds of millions of dollars and that Mr Alvarez was a small investor only admitted to the investment programme as a special favour. While Shatton's business may have been substantial in the past and it had access to some funds, in 2007 and 2008 it was in need of funding.
(12) Once Dr Moor and Shatton gained control of the money in Shatton's sub-accounts beneficially owned by Mr Alvarez and Mr Koenigbauer, Dr Moor set about investing it in the Avento fund, via Mr Marti and IBI, knowing that neither Mr Alvarez nor Mr Koenigbauer were aware of or had authorised that investment in the Avento fund.
(13) Dr Moor and Shatton, acting in concert with Mr Knoebl, intended to use, and did use, Mr Alvarez's and Mr Koenigbauer's money to invest for their own unauthorised purposes including obtaining credit from IBI; they intended to, and did, misreport the expected profits from the investment which, however, turned out to be non-existent. Dr Moor and Shatton thereby misappropriated those monies and conspired with Mr Knoebl to do so.
(14) It is not proved that Shatton, Dr Moor and Mr Knoebl diverted to themselves the monies invested in the Avento fund. Dr Moor's pursuit of Mr Marti and IBI was not a charade. The misappropriated monies beneficially owned by Mr Alvarez and Mr Koenigbauer were then in turn misappropriated from the Avento fund by a person or persons unknown.
(15) It is more likely than not that the defendants intended Mr Alvarez and Mr Koenigbauer to be repaid their principal investment together with some – under-reported – profit. It is more likely than not that the defendants intended that Shatton would pocket the difference between the under-reported profit and the actual profit (had there been any), as well as using the investment monies of Mr Alvarez and Mr Koenigbauer as security to obtain credit.
The Causes of Action
Deceit
Conspiracy
Trust based and proprietary claims; knowing receipt or unjust enrichment
Breach of contract
Limitation and delay
(1) No period of limitation prescribed by this Act shall apply to an action by a beneficiary under a trust, being an action—
(a) in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy; or
(b) to recover from the trustee trust property or the proceeds of trust property in the possession of the trustee, or previously received by the trustee and converted to his use.
Conclusion
Postscript
(a) Period 1 - $54,076.44 : Simple interest at 5% on $1,638,000 from 13 February 2007 until 12 October 2007 (when a further sum of $249,994 was transferred to Shatton). [It is proportionate to simply reduce that new total on 12 October 2007 by the amount of $84,000 transferred between August and November 2007)]
(b) Period 2 - $33,608.66 : Simple interest at 5% on $1,803,994 ($1,638,000+$249,994-$84,000) from 12 October 2007 until 25 February 2008 (when a further sum of $250,013 was transferred to Shatton).
(c) Period 3 - $1,169,939.88 : Simple interest at 5% on $2,054,007 ($1,803,994+$250,013) from 25 February 2008 until judgment on 15 July 2019.